The Employee Retirement Income Security Act of 1974: A Political History

The Employee Retirement Income Security Act of 1974: A Political History

The Employee Retirement Income Security Act of 1974: A Political History

The Employee Retirement Income Security Act of 1974: A Political History

Synopsis

This study of the Employee Retirement Income Security Act of 1974 (ERISA) explains in detail how public officials in the executive branch and Congress overcame strong opposition from business and organized labor to pass landmark legislation regulating employer-sponsored retirement and health plans. Before Congress passed ERISA, federal law gave employers and unions great discretion in the design and operation of employee benefit plans. Most importantly, firms and unions could and often did establish pension plans that placed employees at great risk for not receiving any retirement benefits. In the early 1960s, officials in the executive branch proposed a number of regulatory initiatives to protect employees, but business groups and most labor unions objected to the key proposals. Faced with opposition from powerful interest groups, legislative entrepreneurs in Congress, chiefly New York Republican senator Jacob K. Javits, took the case for pension reform directly to voters by publicizing frightening statistics and "horror stories" about pension plans. This deft and successful effort to mobilize the media and public opinion overwhelmed the business community and organized labor and persuaded Javits's colleagues in Congress to support comprehensive pension reform legislation. The enactment of ERISA in September 1974 recast federal policy for private pension plans by making worker security an overriding objective of federal law.

Excerpt

The Employee Retirement Income Security Act of 1974 (ERISA) affects Americans’ pensions, disability, health and life insurance, and severance pay. Its history has not received sufficient attention, however, in part because of its technical complexity and the priorities of academic research on government and politics. Wooten’s history marks the thirtieth anniversary of the enactment of erisa. He grounds the book in both an exhaustive survey of primary sources and his professional practice as a lawyer and an historian of contemporary policy.

Wooten’s central theme is that the substance of policy for economic security has been important to powerful lawmakers and to most of the people within and outside government on whom they relied for guidance. Substance matters in policy for economic security because policy-makers’ obligations to their constituents reinforce their concern for the broad public interest. Interest groups matter too, as Wooten demonstrates in detail; but they have not dominated the history of erisa, as cynics, including some scholars, claim. Public opinion has also mattered, but in Wooten’s story mainly as policy-makers have succeeded in informing it.

The political history of erisa has larger significance for understanding how Americans enact and revise major social legislation. Perhaps most important, this history demonstrates the difficulty of modifying policy to take account of changing circumstances. For example, a major purpose of erisa was to secure defined-benefit pension plans, but the Pension Benefit Guaranty Corporation it created as an afterthought has devised incentives to terminate these plans. Similarly, ERISA’s preemption of state regulation of employee benefit plans has had profound consequences for health policy that have emerged slowly and have been shaped by the courts as well as by the action and inaction of Congress. Preemption has, moreover, kept many . . .

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